Gulfstream Quarterly Market Update

Gulfstream® Q3 2015 Market Update

IN THIS REPORT Thank you for downloading Hagerty Jet Group’s inaugural Gulfstream Quarterly Market Update. Hagerty Jet Group was founded in 2015 built upon a simple yet successful G650 Market...... 1 strategy: specialize in a specific aircraft category and become an authoritative expert G550 Market ...... 2 in that market segment. In our first nine months in business, we’ve completed nine G450 Market...... 3 Gulfstream transactions totaling $260,000,000 in value. The total includes the sale or GV Market...... 4 acquisition of one G650, five G550s, one GV and two GIVSPs. GIVSP Market...... 5 Recent Transactions.... 6 We attribute this notable success to our expert understanding of Gulfstream aircraft and Aircraft for Sale...... 7 the specialized global markets where they trade.

The Gulfstream Quarterly Market Update is a resource of market information for Gulfstream owners, operators and potential buyers to make objective decisions when engaging the pre-owned market. In this edition we analyze the Gulfstream G650, G550, G450, V, and IV-SP markets; future editions will include additional models.

The Market Update is organized by model. Each model report is divided into three sections: (1) Current Market Data, (2) Historical Supply, Demand, and Pricing Trends, and (3) Expert Commentary. When combined together, the information provides a comprehensive overview of the status and health of each market.

Market Data -This section measures the health of the market by analyzing transaction history, current market offerings, and pricing trends. The information is comprehensive and organized into a summarized presentation for concise review and understanding. Our data provides added insight into specific criteria such as the percentage of aircraft enrolled on engine programs to help you to further understand current market offerings.

Model Value/Transaction History: This section analyzes inventory levels, transaction history and “Bluebook/Vref” values of a specific market. The data is presented in a graph that measures changes in value with historical inventory and transaction levels, showing how past market activity effects current model value.

Commentary: We add insight into the markets by leveraging our experience and knowledge to add additional meaning to the data we have complied by delivering clear, actionable, written interpretation about model specific market conditions.

Whether you are looking to stay up to date, or considering your next Gulfstream sale or purchase, our goal is to provide timely and objective information for your next decision. Thank you for allowing us the opportunity to share our Quarterly Market Update with you. We hope the report becomes an indispensable resource and you consider Hagerty Jet Group for your future business aviation needs.

100 Bull Street, Suite 200 - Savannah, Georgia 31401 - +1.912.236.8500 - - THE GULFSTREAM® EXPERTS Current Supply of G650s in the market: 10

In production Available For Sale YTD High Avg.Transactions Per Month 2015 % Available w/Fwd Galley 135 10- September 2015 1 90 Under Contract Available For Sale YTD Low YTD Sale Price Range % Equipped w/Crew Rest Area 1 4-March 2015 $65.4-$73.4M USD 80 Net For Sale Transactions YTD Current G650 Ask Price Range % Enrolled in Engine Program 9 9 $74.95 - 62.95M USD 50 % Of Fleet For Sale Transactions Same period 2014 Current G650 Avg. Ask Price % With Synthetic Vision 7.4 5 $69.53M USD 90

Gulfstream G650 Value/Transaction History As of October 1, 2015

Gulfstream G650 Availibility/ Transaction History 12

2 For Sale

0 Aircraft Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 G650 On Market G650 Transactions

G650 Market Summary

The G650 Market is split in two categories: “ferry time only” and “pre-owned.” For the first time since entering service in 2012, there’s a steady supply of pre-owned G650’s for sale that are being replaced with newer models. The market is trying to determine how to value the older aircraft as evidenced by multiple price reductions. HJG anticipates early model pre-owned G650’s will sell at or below $60M in the next 9-12 months. The demand for ferry time only airplanes is stronger and prices have not dipped far below $70M but the increased supply of all G650’s is an indicator that prices will soften in the near term.

In production Available For Sale YTD High Avg.Transactions Per Month 2015 % Available w/Fwd Galley 474 33-January 2015 3.4 73 Under Contract Available For Sale YTD Low YTD Sale Price Range % Equipped w/Crew Rest Area 4 23-March 2015 $21-$48M USD 58 Net For Sale Transactions YTD Current G550 Ask Price Range % Enrolled in Engine Program 30 31 $50.5-$20.75M USD 79 % Of Fleet For Sale Transactions Same period 2014 Current G550 Avg. Ask Price % With High Speed Data 6.1 12 $30.74M USD 50

Gulfstream G550 Value/Transaction History As of October 1, 2015

Gulfstream G550 Value/Transaction History $40 Average quarter over quarter 40 depreciation -1.94% over past $38 36 months 35 $36 30 $34 25 $32

$30 20

$28 15 $26

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$24 S

r D o S F

U 5 $22 f a r M c 1 r i $ A $20 x 0 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 G550 For Sale G550 Transactions G550 Fleet Avg

G550 Market Summary

Transaction levels are up significantly in 2015 at the expense of sale prices which continue to deteriorate despite the following indicators. The G550 market is the most active in the large cabin segment with an average of 3 transactions per month with 31 deals closed YTD compared with 12 in the same period in 2014. Current relative supply is very low with only 6% of the fleet for sale in comparison to 11% of the Global XRS market. HJG does not predict any major shifts in the G550 market over the next 6-9 months but we can expect to see continued depreciation.

In production Available For Sale YTD High Avg.Transactions Per Month 2015 % Available w/Fwd Galley 340 26-September 2015 1 38 Under Contract Available For Sale YTD Low YTD Sale Price Range % With High Speed Data 0 20- May 2015 $14.90-$27M USD 42 Net For Sale Transactions YTD Current G450 Ask Price Range % Enrolled in Engine Program 26 13 $31.5-$13.995M USD 61 % Of Fleet For Sale Transactions Same period 2014 Current G450 Avg. Ask Price % With Synthetic Vision 7.6 15 $22.39M USD 46

Gulfstream G450 Value/Transaction History As of October 1, 2015

Gulfstream G450 Value/Transaction History

35 Average quarter over quarter 30 depreciation is 1.99% over past 36 months for G450 Fleet 30 25

25 20

20 15 15

10 10 e l a S

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5 F t f a r 1M USD 1M c r i x$

0 A 0 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 G450 For Sale G450 Transactions G450 Fleet Avg

G450 Market Summary

With ask prices dipping into the low teens for G450’s on engine programs, buyers for the later model GIV-SP’s are now considering the newer style Plane View cockpit. Prices are beginning to converge between the late model IV-SP’s and the early G450’s as the first deliveries are approaching 12 years. Transaction levels are slow with an average of 1 deal per month. Concern about the discontinuation of the model has shortened the backlog and added downward pressure on pricing from the top down. Multiple recent price reductions indicates the G450 may see continued decline in ask prices in the near term as sellers are motivated for end of year deals.

In production Available For Sale YTD High Avg.Transactions Per Month 2015 % Available w/Fwd Galley 191 23-March 2015 2.4 53 Under Contract Available For Sale YTD Low YTD Sale Price Range % With Crew Rest Area 3 12-September 2015 $7.80-$16.7M USD 86 Net For Sale Transactions YTD Current GV Ask Price Range % Enrolled in Engine Program 12 22 $16.5- $11.75M USD 73 % Of Fleet For Sale Transactions Same period 2014 Current GV Avg. Ask Price % With HUD/EVS 6.2 16 $13.86M USD 60

Gulfstream V Value/Transaction History As of October 1, 2015

Gulfstream GV Value/Transaction History $25 Average quarter over quarter depreciation is 25 4.19% over past 36 months for GV Fleet

$20 20

$15 15

$10 10 e l a S

$5 5 r D o S F

t U f

a M r c 1 r i $ x $0 A 0 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 GV On Market GV Transactions GV Fleet Avg

GV Market Summary

Twenty two GV’s have traded in 2015 which represents more than 10% of the fleet. Transactions are up 37.5% from this time last year. Buyers have been attracted by the low prices and tremendous capability of the GV. Recent sale prices have ranged between $8M to $16M with many varying factors. Supply levels are the lowest since Q1 2014 with 15 advertised for sale representing less than 8% of the fleet. GV’s are attracting buyers who may otherwise have focused on IV-SP’s which operate at a similar cost but have much less range. There are buyers in this segment but they’re finding the good inventory has sold. Many remaining aircraft for sale are overpriced or high time with average days on market approaching 1 year. HJG expects pricing to stabilize in the GV market over the next 6-12 months.

4 100 Bull Street, Suite 200 - Savannah, Georgia 31401 - +1.912.236.8500 - - THE GULFSTREAM® EXPERTS Current Supply of GIVSPs in the market: 29

In production Available For Sale YTD High Avg.Transactions Per Month 2015 % With High Speed Data 335 25-September 2015 2.77 37 Under Contract Available For Sale YTD Low YTD Sale Price Range % Enrolled in Engine Program 4 19-February 2015 $4-$11M USD 44 Net For Sale Transactions YTD Current GIV-SP Ask Price Range % With HUD/EVS 25 26 $9.995 - $3.75M USD 17.2 % Of Fleet For Sale Transactions Same period 2014 Current GIV-SP Avg. Ask Price % With -150 APU 7.4 11 $7.18M USD 44

Gulfstream IV-SP Value/Transaction History As of October 1, 2015

Gulfstream GIV-SP Value/Transaction Index

13 Average depreciation per 40 quarter is 5.01% over past 12 36 months for GIV-SP 35 Fleet 11 30 10 25 9

8 20

7 15 6 10 5 For Sale 5 4 Aircraft 3 x$1M USD 0 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 GIV-SP For Sale GIV-SP Transactions GIV-SP Fleet Avg Value

GIV-SP Market Summary

Downward pressure from the GV/G450 markets has pushed the GIV-SP’s values lower in 2015 by nearly 20%. Significant price reductions have resulted with 136% increase in transactions from the same time last year. At these price levels, buyers see tremendous value in the IV-SP which is reflected in transaction levels. We’ve witnessed 26 transactions YTD compared with 11 in the same period in 2014. The IV-SP market is struggling between the older straight GIV’s which are selling consistently below $4M and the GV market which is now dipping below $10M. Late model IV-SP’s and G400’s are competing with the older G450’s in the low teens. HJG thinks the IV-SP market will see continued downward pressure on price for the near term with stabilization on the horizon.

RECENT TRANSACTIONS

2002 Gulfstream V 2004 Legacy 600 2015 Gulfstream G650 Sold February 2015 Sold March 2015 Sold May 2015

2007 Gulfstream G550 2005 Gulfstream G550 2005 Gulfstream G550 Acquired April 2015 Acquired June 2015 Acquired May 2015

2004 Gulfstream G550 1995 Gulfstream IVSP 1996 Gulfstream IVSP Acquired July 2015 Sold August 2015 Sold September 2015

2012 Gulfstream G550 Sold September 2015

6 100 Bull Street, Suite 200 - Savannah, Georgia 31401 - +1.912.236.8500 - - THE GULFSTREAM® EXPERTS Currently Available as of 10/1/15

AIRCRAFT FOR SALE

2009 Gulfstream G550 2008 Gulfstream G450 1994 Gulfstream GIVSP $35,950,000 USD $21,950,000 USD $5,950,000 USD

2008 Gulfstream G150 1988 Gulfstream IV 2014 Falcon 9090LX $6,495,000 USD $4,300,000 $35,950,000 USD

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7 100 Bull Street, Suite 200 - Savannah, Georgia 31401 - +1.912.236.8500 - - THE GULFSTREAM® EXPERTS